A production line at the Holden Elizabeth plant in South Australia. Photo: David Mariuz

"Lightweight assistive systems will facilitate humans' work in factories, resulting in jobs with more high-value tasks and fewer repetitive tasks and physically demanding activities such as weight-lifting and tool-picking," the report by the Australian Workforce and Productivity Agency says.

"Integrating new technologies such as in mechanical and electrical manufacturing will mean that workers need skills to operate and manage computerised and technological advances in machinery and equipment.

"These changes will put pressure on parts of the existing workforce, particularly those in lower skilled or manual roles. As demand for workers with higher-level skills grows, some workers will find themselves at risk of displacement, particularly if they work in a sector which is contracting, or in a lower-skilled occupation."

The report warns that Australia is lagging behind other countries in forging links with the higher education sector and its employment of graduates.

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It says deeper engagement between manufacturers and universities is needed to supply the skilled graduates, research and expertise that will be needed to help the industry make the transition it needs to remain viable.

Despite the recent closures of car manufacturers Ford, GM Holden, Toyota as well as Alcoa and Electrolux, the report says manufacturing still has a crucial, albeit smaller, role to play in the Australian economy. Manufacturing's contribution to the Australian economy is less than half what it was four decades ago.

The report says Australia has been innovative and competitive in low- to medium-technology manufacturing.

Growth in high-end manufacturing will require a stronger focus on advanced manufacturing technologies and knowledge-based services.

Australian Workforce and Productivity Agency chief executive officer Robin Shreeve said traditional manufacturing jobs such as high-end welding would still be needed to build equipment for the government, such as submarines.

"If manufacturing in Australia in the future is going to be more about pharmaceuticals and food processing than car assembly, we need the people with the skills who can work in those new subsectors of the industry," Mr Shreeve said.

The balance will shift to newer areas and won't be so dominated by the traditional areas which we grew up with.

"I think what we're going to see is a broad spectrum of manufacturing in Australia, but the balance will shift to newer areas and won't be so dominated by the traditional areas which we grew up with."